August 13, 2018

US trade tariffs may cause China to consider other markets for meat imports
 

US trade tariffs, instead of pressuring China to buy American meat, may push the latter to source from other countries.

"When the US prices go so expensive after the duties ... we will source from other origins," said Zhang Lihui, Shanghai manager for global meat company PMI Foods. As a result of China's retaliatory tariffs, US pork and beef are being priced exorbitantly, making it less likely that Chinese importers will continue buying these products from the US, Agence France-Presse reported.

"Like for beef, we will buy more from Australia, we will buy more from South America, and maybe a little bit more from Canada," Zhang added.

Following China's tariffs imposed in July, PMI Foods has stopped bringing in cuts of US pork into China. The company has already ceased importing cuts of US pork meat into China after Beijing's tariffs - imposed last month in response to Trump's initial duties on Chinese goods - drove prices up.

Another Chinese  company, Shanghai Xinshangshi International Trade Co. could also get beef and pork from other regions, namely Europe, Australia and South America, according to its general manager Xu Wei. The company brought in US$40 million worth of US beef and pork in 2017 and had planned to raise that to US$100 million this year.

"The gap will be filled very soon," Xu said. "So for the trade war, if we Chinese importers still want to maintain our trade volumes, it would hurt the US suppliers and exporters the most."
 

Changing trade patterns- a consequence of the US-China tariffs - will benefit other countries at the US's expense, according to Zhang. The Chinese market, she said, will very likely source from "replacements."

Currently, it is difficult to ascertain the overall impact of the tariffs, which have affected multiple sectors, but analysts caution that US exporter will lose much business with China.

The US exported around US$140 million worth of pork, beef and related by-products to China in June, before tariffs kicked in, according to the US Meat Export Federation, about 10% of all US beef and pork exports.

While the tariffs would drastically alter trade, the impact on prices of imports will be largely negligible as "the global trade system is quite flexible," Julian Evans-Pritchard, a China economist with Capital Economics, said. This is because suppliers on both sides will absorb much of the tariff costs themselves to maintain their exports.

That is the case with Lin Zhengu, chef and owner of Shanghai's upscale Stone Sal steak restaurant, which serves mainly high-end American and Australian beef.

Costs of prime US beef cuts are already up 30-40% due to the trade war, Lin said, but he and his US suppliers are absorbing the losses themselves rather than pass them on to customers.

"The only way we will switch to other (non-US) beef is if the gate is totally closed. For now, we still want to work with our suppliers and farms," he said.

- AFP/CNA